Question

Port Company purchased 34,200 of the 114,000 outstanding shares of Sund Company common stock on January 1, 20X2, for $185,000. The purchase price was equal to the book value of the shares purchased. Sund reported the following: YearNet IncomeDividends20X2 $46,000 $31,000 20X3 36,000 20X4 20,000 Required:Compute the amounts Port Company should report as the carrying values of its investment in Sund Company at December 31, 20X2, 20X3, and 20X4.

Answer 1

Particulars	20X2	20X3	20X4
Purchase / Opening Value	$ 185,000.00	$     189,500.00	$             200,300.00
Less 30% Dividend of Sund Co	$      9,300.00
Add 30% Net Income of Sund Co	$   13,800.00	$       10,800.00	$                 6,000.00
Carrying Values of Investment in Sund Co at 31 st Dec	$ 189,500.00	$     200,300.00	$             206,300.00
% of Holding of Port Co in Sund Co= 30% (34200 shares/114000 shares)